Small Cigarette Price Rise to Boost Budget

The cost of cigarettes is set to increase by 6 percent, a rise that should inject an estimated $3.6 million into the national budget and reduce cigarette smoking by 9 percent, a World Health Organization (WHO) representative said Tuesday.

Speaking on the sidelines of a workshop on tobacco taxation in Phnom Penh, Yel Daravuth, national professional for the WHO’s Tobacco Free Initiative, said that the minimal increase would be the result of excise on cigarettes rising from 10 percent to 20 percent.

“All the research shows that the first step to lowering the prevalence of smoking and becoming a healthier society is to raise the price of cigarettes,” Mr. Daravuth said, adding that the rise would come about after a sub-decree on the matter is implemented.

Health professionals have long called for Cambodia’s tobacco in­dustry to be more heavily taxed—it is the least taxed in Asean—but Mr. Daravuth believes that the WHO is finally winning the battle.

“I have been working in tobacco awareness and education since 1997 and only now are we starting to have our message heard and acted upon,” he said.

“[The WHO] has previously asked for…increases in tax but it has always been just talk. Now we have a document signed by deputy Prime Minister [and Fi­nance Minister] Keat Chhon, which states a government commitment to…work towards our goals. We now have the Ministry of Health, Ministry of Finance and the WHO working together.”

In Cambodia, between 20 and 25 percent of the cigarette retail price ends up at the tax department, the second-lowest rate in Asean behind Laos.

In Thailand, the tax department sees 70 percent of all cigarette in­come, an Asean high and an annual windfall of about $1.9 billion, according to Ulysses Dorotheo, project director of the Southeast Asia Tobacco Control Alliance’s Southeast Asia Initiative on Tobacco Tax.

Mr. Dorotheo said that the tax reforms proposed in the sub-decree were negligible but a necessary first step in a country where some 28 people die every day from tobacco-related diseases.

“It has been a huge step for the Ministry of Finance to come to the table on this issue,” Mr. Dorotheo said. “We wanted big changes to the way tobacco is taxed but we have gone softly and agreed to incremental changes and once we get those in place we can push much harder.”